The Reuters Institute for the Study of Journalism’s asked 200 digital newsroom leaders what their main revenue focus would be for 2019, for the 2019 Trends and Predictions report. Out of the 200, 52% said subscriptions would be their main focus (only 27% said display ads).

Paid subscriptions are nothing new – people have subscribed to printed newspapers and magazines for decades. Today, when publishers are making less money from printed editions, they’re taking paid subscriptions online to fill the gap in revenue.

There are several tactics publishers use when it comes to paywalls:

Tactic #1: Only display the title and intro of an article before prompting the reader to pay. That’s called the ”hard paywall” and The Wall Street Journal is one of many publishers that use this tactic.

Source: The Wall Street Journal

Tactic #2: Offer a limited number of articles for free, then ask readers to subscribe when that number is exceeded. That’s called a ”soft paywall” and used by The New York Times and generally, most websites with paid subscriptions. Soft paywalls are also sometimes called metered paywalls, and it’s currently the most popular method of implementing a paywall.

Tactic #3: Sell subscriptions for removing ads. This means that people are paying for a frictionless and ad-free experience. This tactic is successfully used by Business Insider – their paying customers don’t see display advertisements a.k.a. web banners. (Note: Business Insider requires readers who use ad-blockers to either whitelist Business Insider’s website or pay up for a subscription.)

Realizing that people are willing to pay for quality content, The New York Times even scaled back the number of articles they allow to read for free – from 10 to 5 per month – that way aiming to attract more paid subscribers.

And it’s not just big publishers that make big bucks from paid subscriptions. In March 2017, the online publishing platform Medium launched its $5 subscription program to allow their authors to earn from the content they produce. Six months later, 83% of those who published their articles behind a paywall had already made money, with some authors receiving nearly $2300.

Benefit #2: Steadier Income

Paid subscription plans give publishers more stability than if they rely on monetizing their content through ads.

Think about it:

Ad revenue largely depends on your website traffic. So, if for some reason the number of your monthly visitors drops, your ad revenue will decrease as well.

Bored Panda, the Buzzfeed-like content submission platform, used to generate over half of their traffic through Facebook with the help of clickbait-y headlines. Suddenly, the platform saw a nearly 50% decrease in traffic when Facebook tweaked its algorithm that determines which stories appear in users’ News Feeds.

Even though it’s not publicly stated, it’s almost certain that such a major drop in traffic affected Bored Panda’s ad revenue. And it wasn’t just this one website – other media that depended heavily on Facebook for referral traffic experienced the same struggles and had to come up with new strategies to keep up their revenue.

Facebook interactions by month. Source: Digiday.com

In the meantime, websites that use paywalls to earn money from their content would see little or no difference in their revenue due to decreased traffic. It’s because they mostly rely on direct, returning traffic and a loyal customer base.

That takes us to the paywall benefit #3…

Benefit #3: Increased Reader Loyalty

Paid subscriptions may result in more loyal readers, and Amazon Prime is a great example that it works:

In 2017, Amazon reported that its Prime members are more engaged and spend more than customers that are not in their paid membership program. And most importantly – the online retailing giant found that 91% of Prime members renewed their subscriptions after the first year, and 96% after the second year.

What the Amazon Prime example shows is that paid subscriptions may be a way to turn random readers into regular consumers of your content. Besides, the fact that online readers’ willingness to pay for content grows every year is proof that consumers are ready to be loyal to media that provide them with high-quality and trustworthy content. Make sure you deliver what’s expected, and you’ll be able to earn good money from a small number of dedicated readers.

Pro tip:Today, people spend more time reading on mobile than ever before, so make sure your content is available on both desktop and a mobile app. People will see more value from your subscription if you’ll provide them with a seamless cross-device experience.

What Are the Drawbacks of Paywalls?

Besides the benefits that paywalls offer to publishers, there are some significant drawbacks of paid subscriptions as well:

Some argue that paywalls are an outdated strategy

Great content may not be enough for people to pay

Fewer chances to be discovered by new readers

Let’s discuss these drawbacks!

Drawback #1: Some Argue That Paywalls Are an Outdated Strategy

Arianna Huffington, the columnist and former co-founder of The Huffington Post, has strongly opposed paywalls, emphasizing that paid content has no place in the future of journalism. She calls paywalls ”a history” and urges publishers to find other ways to monetize content, without restricting access to important news and information.

Arianna Huffington, the former co-founder of The Huffington Post, is strongly against paywalls. All content on Huffington Post is available for free.

By locking crucial information behind a paywall, media is supporting social inequality and grows a knowledge gap, which is in conflict with journalism’s primary goal: to educate and inform about important issues.

One solution for the media to avoid such conflicting situation would be to provide crucial information for free and charge for less important news. But then again, why should people pay for something they can easily live without?

Drawback #2: Great Content May Not Be Enough for People to Pay

While more people are willing to pay for content, not all content is worth paying for.

The problem is:

Even if people like the content you produce, that might not be enough to convince them to pay. In fact, one study found that 82% of users would abandon their favorite news site if they put up a paywall.

As a publisher planning to set up a paywall, you must be sure that you’ll be able to provide value to your readers.

For example, The New York Times saw a significant increase in paid subscriptions after the 2016 US presidential election, when the newspaper aggressively covered Trump’s administration. People were hungry for relevant and trustworthy news, which The Times delivered and, therefore, succeeded.

Source: The New York Times

The problem with such success, however, is that it may be temporary. You can set up a paywall and build up your paying customer base when you have exclusives or there are breaking news to cover. But what happens when the moment has passed? You have to keep delivering valuable content, or you’ll lose your subscribers.

The question is: What is valuable content?

It depends. But generally, news and information that can’t be interchangeable and found somewhere else for free, such as in-depth research, original studies, investigative analysis, etc. Anything that’s just your version of the same news may not be enough to convince people to open their wallets.

Drawback #3: Fewer Chances to Be Discovered by New Readers

The problem with paywalled content is:

It doesn’t rank on Google and rarely gets shared on social media, which lowers your chances to get discovered and attract new readers.

Look:

Search engines can’t access pages that are locked behind a paywall, so they won’t know what your content is about and thus won’t be able to rank it. The good news is – you can avoid this by allowing people access a limited number of free articles, then ask for a payment when they’ve reached the limit. That’s what most news websites do, including The New York Times, Wired, and many more.

Wired offers four free articles per month. Source: Wired

Another thing with paid content is that it hardly ever goes viral, so the subscription-based model by default won’t work for publishers relying on viral content, such as Buzzfeed, Mashable, and similar sites.

Even if viral news is not your thing, bear in mind that people are hesitant to share content that they know people without paid subscription won’t be able to access. That definitely doesn’t help if you want to gain recognition and lure in new readers.

Should You or Should You Not Implement a Paywall?

Well, it depends.

A paywall is definitely something that should be carefully considered, or you may experience the same fate as Long Island’s Daily: the news website spent $4 million to implement a paywall, then ended up with only 35 subscribers in three months.

Here are 4 key questions you should ask yourself before you go for it:

1: What Type of Content Do You Publish?

Do you constantly produce valuable content that can’t be found anywhere else for free? In other words, is your content useful and unique enough to maintain a subscriber base? If the answer is ”yes”, a paywall might work for you.

In the meantime, if you run a news website that reports serious news (elections, natural disasters, etc.) make sure that putting up a paywall would not conflict with the main purpose of your publication. For example, asking people to pay to read the latest news about a hurricane in the region might not be very ethical and could damage your reputation.

And, as mentioned, if your website is based on viral content, paywalls might not be the best idea, as they prevent news from spreading across social media.

2:Will You Be Able to Offer a Premium Experience?

Unique and valuable content is great, but to attract loyal subscribers, you need to deliver more than expected. For one, just ensure a seamless cross-device experience. People today use desktop and mobile devices interchangeably, so make sure your content is where your readers are, no matter what device they use.

Pro tip:You don’t need to hire a team of developers and spend thousands of dollars to create an app for your website. Services like Mobiloud allow publishers to turn their websites into native apps in a matter of minutes. That’s right – you can easily have your blog or news website available as an app that looks and works as good as The New York Times’ or Wired’s.

Besides offering your content on different sizes of screens, you should also make sure that people can become paid subscribers through their mobile devices. Otherwise, you may lose a great part of potential customers who will never switch devices just to be able to make the payment. The mentioned News mobile app platform is the perfect solution for implementing paywalls on mobile apps.

3: Do You Want to Make More Money from Your Site?

Or rather – is the money you’re making from ads, affiliate marketing or sponsored content enough for you to successfully run and manage your website?

And if it’s not – do you have a decent number of loyal readers that can’t get enough of your content? If you do, a paywall might be a great strategy for boosting your revenue. You don’t necessarily need millions of monthly visitors for a paywall to work successfully; you only need a bunch of real fans that love the content you produce.

That being said, remember that a paywall will affect your monthly traffic, as paid content may rank lower on Google and get fewer shares on social media. If losing such free traffic means losing most of your ad revenue, do some careful calculations to avoid the risk of putting yourself out of business.

In other words, ask yourself – will I miss having extra free traffic? If the answer is ”yes”, then you should probably say ”no” to a paywall.

Wrapping Up

Above everything else, only consider launching a paywall if you’re 100% sure you’ll be able to create excellent content that’s worth the money you’re about to ask.

Then, once your paid membership program is live, give it some time, analyze results and be prepared to reverse if it doesn’t make you money. Or, even worse, makes you lose it.

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